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Tuesday, 06 September 11
INDONESIAS PROPOSED COAL EXPORT BAN MAY HAVE IMPACT ON THE INDIAN POWER SECTOR - DIPESH DIPU
.jpg) COALspot.com - This is a special interview about Indonesian proposed coal export ban by 2014, with Mr. Dipesh Dipu, Director of Deloitte Touche Tohmatsu, India.
The Indonesian government is currently in the process of drafting a new regulation that could ban the export of low-grade coal by January 12, 2014. This is likely to apply to coal below 5700 kcal/kg on air dried basis in value.
As of now Indonesia is producing around 150 million tons of coal with calorific value below 5700 GAD (according to chairman of Indonesian coal mining association). However by 2014, there are possibilities the total production of below 5700 GAD coal may reach more than 200 million per annum.
Will Indonesian coal export ban impact on the Indian fuel requirements?
The earlier grade of coal that was being considered for proposed ban has GCV of 5100 kcal/kg of less (adb), which can be comparable to 3800-4200 kcal/kg (arb) domestic coal available in India. This grade of coal has found favor in India primarily due to likely price advantage but economics of power generation based on such grade of imported coal may be a suspect. This considering that such grades of coal from Indonesia typically have high moisture content, which makes transportation cost per unit of energy generated higher. The quantum of the low grade of coal (<5100 kcal/kg adb) procured from Indonesia is likely to remain relatively low.
However, if the new definition of low grade coal is applied (<5700 kcal/kg adb), it may be reasonable to believe that such a ban may have impact on the Indian power sector as volumes in this grade of coal are expected to rise in the proportion of coal exports to India. Several of the acquisitions made by Indian power generation companies in Indonesia have been in coal blocks that will produce coal of this grade, and a blanket ban on the exports can jeopardize power plant development in India.
On the other hand, the domestic Indonesian market may not be prepared to consume all the coal mined of this grade in view of the power generation capacity addition plans in Indonesia. In such a case, the coal mine development is likely to be deferred. The Indonesian law makers may need to reconsider domestic market demand, investment climate in coal sector and impact of the legislation on the export revenues.
What is the alternative source for Indian power industry if the proposed coal export ban come into effect by 2014?
Indian power generation companies have been forced to look out for coal assets abroad due to the investment and regulatory environment within the country. India boasts of more than 110 billion tonnes of coal reserves, which largely fall within a 300 meters of depth. If the regulatory and investment environment is amended to allow greater participation of private sector Indian dependence on imports will be reduced.
However, for imports, India will continue to look at Indonesia, South Africa, Australia and newer destinations like Mozambique and Columbia. But these sources also have constraints, domestic demands in South Africa is likely to restrict quantum jump in exports out of South Africa. Indonesia has also proposed domestic market obligations. Mozambique may have infrastructure constraints for large volumes of coal being transported from Tete province to ports of Maputo, Ncala or Beira. Australian coal is of high quality but may have higher costs of mining and transport.
What would be the additional cost if Indian consumers switch their sourcing origin from Indonesia?
Indonesia has competitive advantage due to its geographical closeness. However, on a per tonne basis, assuming comparable quality, costs of transport may make marginal difference when compared with South Africa and Mozambique.
When compared to Australian coal, due to the high quality, cost of energy may well be comparable even though shipping costs are higher. Between Indonesian coal (5500 kcal/kg adb priced at USD 90 per tonne) and Australian coal (6500 kcal/kg adb priced at USD 120 per tonne), indicative variable cost difference of power generation may be about Indian Rupees 0.20 to 0.30 per kWh (electricity unit) in favor of Indonesian coal.
Will it affect Indian economy growth or this coal export ban is ignorable as India can easily identify alternative sources of fuel?
The magnitude of growth in power generation in India will necessarily mean that coal will remain the mainstay. Natural gas has had issues of availability. Nuclear plant development is facing socio-political challenge in view of the risks of technology failure. Development of hydel power has also faced issues of land acquisition, rehabilitation & resettlement apart from the technical issues of hydro-geological features. Renewable sources such as solar and wind generation are still projected to constitute a small portion of India power generation mix. Identifying an alternative source that can match coal in its accessibility, availability and affordability in the context of scale of capacity addition required in India is a challenge.
What is the Indian government's role on this issue, whether government has to come out with the solution such as easing Indian mining and environment law, open up mining for foreigners, G2G arrangement, etc…?
There is a need to look at domestic sources with pro-active and constructive approach and make all necessary legal and statutory amendments that make the resources available and mineable. Easing the regulations may not be one of such measures but making those regulations work in sync with each other in a time bound and predictable manner must certainly be.
There is certainly a case for opening the domestic coal sector for private participation, including independent miners, and for foreign participation so that newer technology and enhanced scale of operations are implemented in India. The regulation also needs to permit risk capital to come in for prospecting and exploration.
For imports the G2G relations can be leveraged to secure coal assets. India has good relationship with Indonesia and has also signed a tax treaty with Mozambique in 2010 which will facilitate investments. Government may also engage with these countries to ease exports to India and extend fiscal support to coal mining companies investing in mining and associated infrastructure development.
About Dipesh Dipu
Dipesh Dipu works as Director with Deloitte Touche Tohmatsu India Pvt. Ltd in the Energy and Resources consulting practice of the firm and anchors the Firm’s initiative in the mining and metals sectors.
He is a mining engineering graduate from Indian School of Mines and is a Chartered Financial Analyst (CFA). He has also done executive program in business management from Indian Institute of Management Calcutta. Dipesh has recently been awarded the Abheraj Baldota Gold Medal for the Young Mining Engineer of the Year 2007 by the Mining Engineers’ Association of India in recognition of his contributions in the improvement of mining industry in India.
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Thursday, 16 February 17
IF I PLAN TO UNDERTAKE A CHARTERPARTY WITH AN UNFAMILIAR ENTITY, WHAT STEPS CAN I TAKE TO ENSURE THE CHARTERER WILL PAY THEIR HIRE? - SHIPOWNERS' CLUB
KNOWLEDGE TO ELEVATE
Due to the difficult conditions currently existing in the shipping market, particularly in the offshore sector, Members a ...
Wednesday, 15 February 17
SHIPPING MARKET INSIGHT - INTERMODAL
Looking at the state of the Dry Bulk market exactly a year ago, there is no doubt that there is a significant improvement and despite the fact that ...
Tuesday, 14 February 17
OPTIMISM HAS STARTED TO SLOWLY FLOW BACK INTO THE DRY BULK MARKET - GEORGE LAZARIDIS
Optimism has started to slowly flow back into the dry bulk market, with many in the market showing renewed optimism as the Pacific basin starts to ...
Monday, 13 February 17
COMBINED COAL SALES OF BUMI RESOURCES ROSE TO 87.7 MILLION TONS IN FY'16; UP 10.6 PERCENT Y/Y
COALspot.com: Combined Coal Sales of Bumi Resources rose to 87.7 million tons in FY’16 compared with 79.3 million tons in FY’15. ...
Monday, 13 February 17
THE FREIGHT MARKET CONTINUED TO TUMBLE IN FEBRUARY
COALspot.com: The Freight market was continued its downfall in all segments except Panamax for the week ending 10 February 2017.
The Balt ...
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- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Manunggal Multi Energi - Indonesia
- Goldman Sachs - Singapore
- Eastern Coal Council - USA
- Wood Mackenzie - Singapore
- Kohat Cement Company Ltd. - Pakistan
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Parliament of New Zealand
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- PNOC Exploration Corporation - Philippines
- ASAPP Information Group - India
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- India Bulls Power Limited - India
- Salva Resources Pvt Ltd - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Planning Commission, India
- Attock Cement Pakistan Limited
- Economic Council, Georgia
- Billiton Holdings Pty Ltd - Australia
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Kaltim Prima Coal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- GVK Power & Infra Limited - India
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Sojitz Corporation - Japan
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- ICICI Bank Limited - India
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- CIMB Investment Bank - Malaysia
- PowerSource Philippines DevCo
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- Minerals Council of Australia
- Eastern Energy - Thailand
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Essar Steel Hazira Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Georgia Ports Authority, United States
- Marubeni Corporation - India
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Iligan Light & Power Inc, Philippines
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Orica Australia Pty. Ltd.
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Makarim & Taira - Indonesia
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Jorong Barutama Greston.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Holcim Trading Pte Ltd - Singapore
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Mercuria Energy - Indonesia
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Aditya Birla Group - India
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Edison Trading Spa - Italy
- Antam Resourcindo - Indonesia
- Therma Luzon, Inc, Philippines
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Bharathi Cement Corporation - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- White Energy Company Limited
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sindya Power Generating Company Private Ltd
- Global Business Power Corporation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Gujarat Sidhee Cement - India
- Mintek Dendrill Indonesia
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Baramulti Group, Indonesia
- Pendopo Energi Batubara - Indonesia
- Star Paper Mills Limited - India
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Electricity Authority, New Zealand
- Sakthi Sugars Limited - India
- Alfred C Toepfer International GmbH - Germany
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